Chapter 20 - 3e

Chapter 20—Economic Development
MULTIPLE CHOICE
1. The yardstick most often used to compare living standards across nations is
a. average production cost per unit
b. sales revenue per month
c. utility per capita
d. output per capita
e. imports per year
ANS: D PTS: 1 DIF: Moderate NAT: Analytic
LOC: Productivity and growth TOP: Worlds Apart
2. The yardstick most often used to compare living standards across nations is
a. average production cost per unit
b. sales revenue per month
c. utility per capita
d. GDP per person
e. imports per year
3. Which of the following does not describe the World Bank?

a. an economic development institution
b. affiliated with the United Nations
c. offers low-fee checking accounts to anyone in the world
d. estimates output per capita figures
e. uses output per capital figures to classify economies
ANS: C PTS: 1 DIF: Easy NAT: Analytic
LOC: International trade and finance TOP: Worlds Apart
4. Which of the following is true about GNP?

a. includes profits earned by a Mercedes factory in Alabama
b. excludes profits earned by General Electric in India
c. measures the market value of all goods and services produced by resources supplied the
home country’s residents and firms, regardless of the location of the resource
d. stands for Generally Nice Products
e. used by countries to classify the World Bank
ANS: C PTS: 1 DIF: Moderate NAT: Reflective Thinking
LOC: International trade and finance TOP: Worlds Apart
5. The World Bank sorts countries into the following three major groups:
a. high-income economies, middle-income economies, low-spending economies
b. high-spending economies, middle-spending economies, low-spending economies
c. super-high-income economies, middle-income economies, low-income economies
d. high-income economies, middle-income economies, zero-income economies
e. high-income economies, middle-income economies, low-income economies
ANS: E PTS: 1 DIF: Moderate NAT: Analytic
6. In 2009, high-income economies with only about one eighth of the world’s population produced
almost three-fourths of the worlds output.
a. True
b. False
ANS: A PTS: 1 DIF: Easy NAT: Analytic
7. Industrial market countries are also referred to as

a. developing countries
b. low-income economies
c. middle-income economies
d. transitional economies
e. high-income economies
ANS: E PTS: 1 DIF: Easy NAT: Analytic
LOC: Productivity and growth TOP: Developing and Industrial Economies
8. Compared to industrial market countries, developing countries usually have

a. exports consisting mostly of agricultural products and raw materials
b. faster population growth
c. higher unemployment
d. higher rates of illiteracy
e. All of the answers are correct
9. On average, about half the labor force in developing countries works in agriculture, versus only about
3 percent in industrial market countries.
a. True
b. False
10. Which of the following is not a country or region most likely to be among industrial market countries?
a. Western Europe
b. North American
c. Australia
d. South Asia
e. Japan
ANS: D PTS: 1 DIF: Easy NAT: Analytic
11. There is a tremendous range in productive performance around the world.

a. True
b. False
12. Differences in stages of development among countries are reflected in a number of ways besides per
capita income.
a. True
b. False
LOC: Productivity and growth TOP: Health and Nutrition
13. Which of the following groups has the lowest life expectancy at birth?
a. middle-income economies
c. high-income economies
d. sub-Saharan African economies
e. all the world’s economies
LOC: The study of economics, and definitions of economics TOP: Health and Nutrition
14. Which of the following groups has the lowest malnutrition rate among children less than 5 years of
age?
d. sub-Saharan African economies
15. Which of the following groups has the highest infant mortality rate?
d. Western European economies
ANS: B PTS: 1 DIF: Easy NAT: Analytic
16. If the country of Zorg has a birth rate of greater than 2.2 births per woman, it is likely that Zorg is an
industrial market country.
a. True
b. False
ANS: B PTS: 1 DIF: Moderate NAT: Reflective Thinking
LOC: Productivity and growth TOP: High Birth Rates
17. Which of the following is a cause of higher birth rates in developing countries?
a. Children are viewed as a source of farm labor
b. Children are viewed as economic and social security as the parents age
c. Higher child mortality rates engender higher birth rates
d. All the answers are correct
e. None of the answers is correct
18. Which of the following is not a country that has more people over the age of 65 than under the age of
15?
a. Italy
b. Japan
c. Burundi
d. Germany
e. Portugal
ANS: C PTS: 1 DIF: Moderate NAT: Reflective Thinking
19. A trend in developing countries is that

a. the birth rate during a typical woman’s lifetime has increased from three to six children
b. attitudes toward family size are changing
c. when women have employment opportunities outside the home, fertility rates increase
d. as women become better educated, they earn less
e. as women become less educated, they tend to have fewer children
ANS: B PTS: 1 DIF: Moderate NAT: Analytic
20. Throughout the world, poverty is greater among women than men, particularly women who head
households.
a. True
b. False
LOC: Markets, market failure, and externalities
TOP: Women in Developing Countries
21. If Gloria is woman in a developing country, then it is likely that

a. she is less educated than most men in her country
b. her brother has dropped out of high school, but not she has graduated
c. she has more employment opportunities and earns higher wages than her male classmates
d. she and other women will not have to work long hours in agriculture
e. she has special access to resources such as land, capital, and technology
ANS: A PTS: 1 DIF: Moderate NAT: Reflective Thinking
TOP: Women in Developing Countries
22. One likely reason that the country of Appleland is poor is that it
a. does not produce many goods and services
b. has highly educated and productive female workers
c. has a low birth rate
d. enjoys a low infant mortality rate
e. has a high literacy rate
LOC: Productivity and growth TOP: Productivity: Key to Development
23. Labor productivity depends on the

a. quality of the labor
b. the amount of capital
c. the amount of natural resources
d. the amount of other inputs, such as technology
LOC: Productivity and growth TOP: Low Labor Productivity

a. quality of the labor
b. the effectiveness of government
c. the proportion of the labor force that is unionized
d. the size of the economy

a. the effectiveness of government
b. the availability of technology
d. the size of the economy

a. the effectiveness of government
b. the size of the economy
d. the amount of capital
27. The country of Yipi can raise its productivity by investing more in
a. both human and physical capital
b. human capital only
c. physical capital only
d. stable foreign economies
e. stocks and bonds
28. Which of the following is true?

a. In low-income countries, less than 5 percent of those 15 and older were illiterate in 2007
b. In middle-income countries, 17 percent of those 15 and older were illiterate in 2007
c. In high-income countries, 38 percent of those 15 and older were illiterate in 2007
d. Education bears little relationship to economic development in high income countries
e. Education is more important to the economic development of low income countries than it
is to high income countries
LOC: Productivity and growth TOP: Technology and Education
29. Education makes people more receptive to new ideas and methods, which leads to economic
development.
a. True
b. False
LOC: Productivity and growth TOP: Technology and Education
30. If Eddie Li is a skilled worker employed in a low-skill job, he is

a. underemployed
b. unemployed
c. overemployed
d. fully employed
e. All the answers are correct
LOC: Unemployment and inflation TOP: Inefficient Use of Labor
31. In developing nations, the combined rate of urban and rural unemployment or underemployment is
about
a. 1 percent
b. 10 percent
c. 20 percent
d. 30 percent
e. 80 percent
32. Unemployment is measured primarily in urban areas because in rural areas farm work is usually an
outlet for labor.
a. True
b. False
33. In 2010 the unemployment rate in Zimbabwe was 95%

a. True
b. False
34. The average value added per U.S. farm worker is about __________ times that of farm workers in
low- and middle-income countries.
a. one half
b. one
c. ten
d. seventy-five
e. five hundred
LOC: Productivity and growth TOP: Inefficient Use of Labor
35. Which of the following statements best serves as a summary of the other statements?
a. Low income can mean poor nutrition during the formative years, which can retard mental
and physical development
b. Low income and low productivity may reinforce each other in a cycle of poverty
c. Low productivity obviously results in low income
d. Low income means less saving and less saving means less investment in human and
physical capital
e. Poverty can result in less education, less capital formation, a poor diet, and little health
care
ANS: B PTS: 1 DIF: Hard NAT: Analytic
LOC: Productivity and growth TOP: Inefficient Use of Labor
36. Which of the following is not a developing country classified as a high-income economy because of
possessing huge oil reserves?
a. United Arab Emirates
b. Chad
c. Qatar
d. Kuwait
e. Bahrain
LOC: Gains from trade, specialization and trade TOP: Natural Resources
37. The country of Bananaland has an abundant supply of banana trees and therefore must be a modern
industrial economy.
a. True
b. False
LOC: Gains from trade, specialization and trade TOP: Natural Resources
38. A requirement for development is

a. an unreliable system of financial institutions
b. a lack of saving by households and firms
c. low confidence in domestic currency
d. low and predictable inflation that encourages saving
ANS: D PTS: 1 DIF: Moderate NAT: Reflective Thinking
LOC: International trade and finance TOP: Financial Institutions
39. In developing countries, it is not true that

a. banks are often viewed with suspicion
b. at the first sign of economic problems, many bank depositors withdraw their funds
c. because banks cannot rely on a continuous supply of deposits, banks cannot make loans
for extended periods
d. if financial institutions fail to serve as intermediaries between savers and borrowers, the
lack of funds for investment will make growth rates double
e. the credit provided by banks as a percent of total output is one fifth that in high-income
countries
LOC: International trade and finance TOP: Financial Institutions
40. Production and exchange depend on an reliable infrastructure of

a. transportation
b. communication
c. sanitation
d. electricity
LOC: Productivity and growth TOP: Capital Infrastructure
41. The group of countries more likely to have a high number of telephone lines per 1,000 people is
a. high-income countries
b. zero-income countries
c. infinite-income countries
d. low-income countries
e. middle-income countries
ANS: A PTS: 1 DIF: Easy NAT: Reflective Thinking
42. Countries with reliable phone service have difficulty not only communicating, but also reaping the
benefits of other technology advances, such as the Internet.
a. True
b. False
43. Which of the following resources is necessary to combine efficiently the other resources to produce
goods and services?
a. natural resources
b. capital
c. labor
d. entrepreneurial ability
e. financial institutions
LOC: The role of incentives TOP: Entrepreneurial Ability
44. Sjen Mavago, the economics minister of the country of X-Marks-the-Spot, has concluded that
entrepreneurs are unable to generate the kind of growth the country needs. Her decision to create state
enterprises might be motivated by the desire to
a. earn profit
b. provide jobs for friends and relatives of government officials
c. take risks
d. encourage a free market
e. limit government’s role in the economy
LOC: The role of incentives TOP: Entrepreneurial Ability
45. Laws, customs, conventions, and other institutional elements that sustain an economy fall under the
category of
a. rules of the game
b. human capital
c. natural resources
d. financial institutions
e. capital infrastructure
LOC: Productivity and growth TOP: Rules of the Game
46. Social capital is

a. the shared values and trust that promote cooperation in the economy
b. the buildings and equipment used to produce goods and services
c. a government regulation aimed at improving health and safety
d. the accumulated knowledge, skill, and experience of the labor force
e. the owner’s own or borrowed money invested in a business
ANS: A PTS: 1 DIF: Moderate NAT: Analytic
47. If there is a great deal of violence and uncertainty in the country of Crazico, people will be less willing
to invest in their own future or in the future of Crazico.
a. True
b. False
48. Privatization is the process of turning government enterprises into private enterprises in
transitional economies.
a. True
b. False
49. All developed countries achieve their status as a result of large supplies of natural resources.
a. True
b. False
LOC: Markets, market failure, and externalities TOP: Natural Resources
50. An example of a poverty trap is

a. extended time periods without war
b. a lack of mineral wealth
c. a dysfunctional or corrupt government
d. laws and regulations to help detect fiscal fraud
ANS: C PTS: 1 DIF: Moderate NAT: Analytic
LOC: Markets, market failure, and externalities TOP: Rules of the Game
51. One possible reason that the country of Whatsis is trapped in poverty is
a. a lack of mineral wealth
b. an honest and functional government
c. laws and regulations to help detect fiscal fraud
d. a free press
e. a civil war
ANS: E PTS: 1 DIF: Moderate NAT: Reflective Thinking
52. Successful management of resource wealth is a poverty trap

a. True
b. False
53. To escape poverty, a country needs

a. Western banks to report deposits by corrupt officials
b. to develop laws and regulations to ensure the transparent management of natural resources
c. special trade advantages
d. ten years of domestic peace
54. Usually the poorest fifth of the population in a developing country receives more than 20 percent of
the country’s income.
a. True
b. False
LOC: Efficiency and equity TOP: Income Distribution Within Countries
55. Developing countries

a. do not benefit from foreign aid
b. do not benefit from private investment
c. generate less than half of their annual flow of foreign exchange from exports
d. must acquire foreign exchange in order to pay for imports
e. need to decrease labor productivity
LOC: International trade and finance TOP: International Trade and Development
56. The bulk of exports from industrial countries are

a. manufactured goods
b. primary products
c. agricultural goods
d. raw materials
e. raw sugar products
LOC: International trade and finance TOP: Trade Problems for Developing Countries
57. The bulk of exports from non-industrial countries are

a. manufactured goods
b. primary products
c. agricultural goods
d. natural resources
e. raw sugar products
58. A problem for developing countries is that the prices of primary products fluctuate more widely than
do the prices of finished goods because
a. crop supply changes very little despite the weather
b. crop supply fluctuates with the weather
c. weather never varies
d. crops go in and out of fashion as new diets are developed
e. crop demand fluctuates with the weather
59. If the country of Deficitland is experiencing trade deficits, they are more likely to cut imports of
a. beef
b. cocoa
c. coffee
d. capital goods
e. soybeans
ANS: D PTS: 1 DIF: Easy NAT: Reflective Thinking
60. Developing countries must confront industrial countries’ trade restrictions, such as tariffs and quotas.
a. True
b. False
61. Which of the following is not true about migration?

a. Migration plays an important role in the economies of developing countries
b. A major source of foreign exchange in some countries is the money sent home by migrants
c. Migration provides a valuable safety valve for poor countries
d. The best and brightest professionals are very unlikely to migrate to developed countries
e. Every year thousands of nurses migrate from countries such as Kenya and the Philippines
to the United States
LOC: International trade and finance TOP: Migration and the Brain Drain
62. Imagine that the best and the brightest professionals of the planet Venus migrate to Earth to work. The
upside of this brain drain is
a. the remittances sent home to Venus
b. getting rid of snooty Venetians
c. not being able to afford the modern machinery that will help the Venetians become more
productive
d. decreased labor supply on Venus
e. increased income inequality on Venus
LOC: International trade and finance TOP: Migration and the Brain Drain
63. At the end of the production chain that a typical economy moves up along is
a. raw material
b. agriculture
c. hunting and gathering
d. services
e. manufacturing
LOC: International trade and finance TOP: Import Substitution Versus Export Promotion
64. One of the reasons that import substitution is popular is that

a. there was never any demand for the products in question
b. infant industries would have to compete against global rivals
c. it benefits suppliers to the favored domestic industries
d. it slows down the progression through the production chain
e. the emphasis is on comparative advantage and trade expansion
65. When a developing country relies on import substitution,

a. it sacrifices the gains from specialization and comparative advantage
b. replaces low-cost foreign goods with high-cost domestic goods
c. domestic producers, shielded from foreign competition, usually fail to become efficient
d. other countries often retaliate with their own trade restrictions
66. When a developing country relies on export promotion,

a. it concentrates on producing for its domestic market
b. it builds its technological and educational base and then can make more complex products
for export
c. domestic producers have sufficient protection that they can afford to become inefficient
d. its government must intervene more in markets
67. Export promotion has been more successful than import substitution.
a. True
b. False
68. Which of the following creates an obstacle to pursuing freer international trade?
a. Consumers do not recognize their potential gains
b. Losses are widespread
c. Domestic producers do not recognize their potential losses
d. Government has plenty of political will and support to remove trade barriers
e. Consumers can easily organize to demand free trade
LOC: International trade and finance TOP: Trade Liberalization and Special Interests
69. A World Bank study suggest a strong link in Africa between governments that __________ special-
interest groups and __________ rates of economic growth.
a. cater to, high
b. cater to, moderate
c. cater to, low
d. ignore, low
e. ignore, moderate
70. Studies by the World Bank have underscored the successes of countries that have adopted trade
liberalization policies.
a. True
b. False
71. The country of Excludania can discourage foreign investment by

a. requiring foreign investors to find a local partner who must be granted controlling interest
b. setting different exchange rates for different categories of transactions
c. heavily restricting private international borrowing and lending
d. All the answers are correct
LOC: International trade and finance TOP: Foreign Aid and Economic Development
72. Any international transfer made on concessional terms for the purposes of promoting economic
development is
a. foreign aid
b. first aid
c. immigration
d. private investment
e. remittances
LOC: The role of government TOP: Foreign Aid
73. Foreign aid can take the form of

a. only money, capital goods, or technical assistance
b. only capital goods, technical assistance, or food
c. money, capital goods, technical assistance, or food
d. only money, technical assistance, or food
e. only technical assistance or food
74. Which of the following is not an example of foreign aid?

a. U.S. discount department stores purchasing toys from Chinese manufacturers
b. The International Monetary Fund extending loans to countries that have trouble with their
balance of payments
c. The World Bank providing loans and grants to support health and education programs
d. The U.S. government paying to build an electricity plant in Albania
e. The Australian government paying to repair highways in Tonga
75. Which of the following is true about foreign aid provided by the United States?
a. During the last four decades, the U.S. has provided less than $400 million in aid
b. Most U.S. aid has been coordinated by the Department of Defense
c. The U.S. Agency for International Development emphasizes short-range plans
d. The U.S. Agency for International Development concentrates primarily on health,
education, and agriculture
e. Foreign aid is large part of the U.S. federal budget
76. Foreign aid often becomes a source of discretionary funds that benefit poor people in developing
countries and not the countries’ leaders.
a. True
b. False
LOC: The role of government
TOP: Does Foreign Aid Promote Economic Development?
77. When foreign aid is tied to purchases of low-priced food from the donor country, farm prices can drop
in the developing countries, hurting poor farmers.
a. True
b. False
78. A downside to foreign aid is that

a. developing countries have not necessarily increased their ability to become self-supporting
at higher standards of living
b. many recipient countries are doing less of what they had done well
c. the agricultural sectors of recipient countries have suffered
d. government officials have been insulated from their own incompetence
79. Disappointed with problems caused by being a recipient of foreign aid from donor governments, the
country of Upsilon should consider
a. refusing all future offers of aid
b. privatizing of aid, such as receiving funds from private not-for-profit agencies
c. becoming a donor instead
d. seeking even more government-sponsored aid
ANS: B PTS: 1 DIF: Hard NAT: Reflective Thinking
80. Around the world, once-socialist countries have replaced central plans with
a. foreign aid
b. budgets
c. special interests
d. markets
e. capital equipment
ANS: D PTS: 1 DIF: Hard NAT: Analytic
LOC: Markets, market failure, and externalities TOP: Transitional Economies
81. Economic systems can be classified based on

a. the ownership of resources only
b. the ownership of resources, the types of crops grown, and the incentives used to motivate
people
c. the way resources are allocated to produce goods and services and the incentives used to
motivate people only
d. the ownership of resources, the way resources are allocated to produce goods and services,
and the incentives used to motivate people
e. the ownership of resources, the way resources are allocated to produce goods and services,
and the average education of workers
LOC: The role of government TOP: Types of Economic Systems
82. Which of the following does the country of Fuggedaboutit not have to be concerned about?
a. choosing a system of resource ownership
b. allocating resources
c. earning a profit for its owners
d. providing individual incentives
e. answering the three economic questions
ANS: C PTS: 1 DIF: Easy NAT: Reflective Thinking
83. The economic system that includes private ownership of most resources and the coordination of
economic activity by price signals generated by market forces is
a. capitalism
b. socialism
c. communism
d. mercantilism
e. progressivism
84. A soft budget constraint applies when enterprises that earn profits distribute those profits to their
private owners.
a. True
b. False
LOC: The role of government TOP: Enterprises and Soft Budget Constraints
85. Soft budget constraints will lead to

a. inefficiency
b. quick responses to changes in supply and demand
c. good investment decisions
d. high product quality
e. managers eager to satisfy consumer demand rather than production quotas
86. In centrally planned economies, most prices are not

a. established by central planners
b. inflexible
c. set below the market-clearing level
d. based on consumer demand
e. the cause of shortages of supply
87. Which of the following occurs when there was a shortage of supply in a centrally planned economy?
a. Central planners reduced the amount supplied to each sector
b. Shoppers waited in long lines at retail stores
c. Store shelves were empty
d. Shop operators expected “tips” or bribes for supplying scarce consumer goods
88. Output per capita is the most commonly used measure of the prosperity of a nation.
a. True
b. False
LOC: The role of government TOP: Worlds Apart
89. A significant feature of developing countries is that they use their labor less efficiently than developed
countries.
a. True
b. False
LOC: The role of government TOP: Inefficient Use of Labor
90. Most of the labor force in developing countries work in the low wage manufacturing sector.
a. True
b. False
LOC: The role of government TOP: Inefficient Use of Labor
91. Which of the following is not an example of an institution (rules of the game)?
a. formal rules of behavior
b. government takeover of private corporations
c. a constitution
d. informal constraints on behavior
e. traditions
LOC: Markets, market failure, and externalities TOP: Markets and Institutions
92. A reliable system of property rights and enforceable contracts are prerequisites for creating incentives
that support a healthy market economy.
a. True
b. False
LOC: The role of incentives TOP: Markets and Institutions
93. Which of the following can help shape the incentive structure of the country of Gammaland?
a. resource availability
b. prices
c. income
d. incentives
94. In the developing country of Sixsigma, most likely

a. resource owners tend to supply their resources where are most valued
b. almost all workers are employed in service industries
c. links to family or clan are totally unimportant
d. children are expected to choose occupations as different as possible from their parents’
occupations
e. family businesses resist growth to avoid having to hire people from outside the family
95. How many countries in the world have failed to come up with the rules of the game that lead to
sustained economic growth?
a. none
b. most
c. half
d. one
e. There is not enough data to answer this question
TOP: Institutions and Economic Development
96. One thing that did not happen in the former Soviet Union was
a. widespread corruption
b. a lack of faith in formal institutions
c. workers bribing officials to get good jobs
d. consumers paying fair market prices to get desired products
e. prices not being allowed to allocate resources efficiently
97. In a system of impersonal exchange,

a. bureaucratic ties on the production side are critical
b. the economy benefits from specialization and modern technology
c. inside connections on the consumption side are necessary
d. successful institutional evolution makes no difference
e. there is very little division of labor
98. The first step in gradualism is

a. the privatization of larger industrial sectors
b. the phasing out of money-losing enterprises
c. large industrial enterprises quickly finding market-clearing prices
d. the thriving of small-scale capitalism
e. state-owned enterprises running more like businesses to maximize profit
TOP: The Big Bang Versus Gradualism
99. If the country of Heehee makes the transition from central planning to a market economy in a matter of
months, it is an example of the big-bang approach.
a. True
b. False
100. One example of gradualism is taking place in

a. China
b. the United Nations
c. New Zealand
d. Japan
e. France
101. Privatization is the

a. process of turning private enterprises into public enterprises
b. the same as nationalization
c. process of turning public enterprises into private enterprises
d. process of turning state-owned enterprises into public enterprises
e. process of turning sole proprietor enterprises into corporate enterprises
LOC: Markets, market failure, and externalities TOP: Privatization
102. Privatization requires

a. transparency
b. the training of competent managers
c. the installation of adequate facilities for transportation
d. All of the answers are correct
103. A firm should be transparent, meaning

a. the windows at headquarters should be cleaned regularly
b. if executives lie during a stockholder meeting, people should be able to see right through
them
c. someone should be able to look at the books and the balance sheet and tell exactly what’s
going on
d. None of the answers is correct
104. The major advantage of a market economy is that

a. it maximizes the need for resource-flow data
b. prices convey most of the information necessary to coordinate economic activity among
firms
c. data are aimed at central planners
d. prices are essentially meaningless
105. If the centrally planned economy of Rowboat dismantles central controls before institutions such as
property rights are in place, instability will most likely result.
a. True
b. False
TOP: Institutional Requirements of Efficient Markets
106. In recent years in Russia, the most popular tax system has been
a. graduated rates topping at 13 percent
b. a flat rate of 60 percent
c. graduated rates topping at 40 percent
d. graduated rates topping at 30 percent
e. a flat rate of 13 percent
LOC: The role of government TOP: Institutional Requirements of Efficient Markets
107. There is no unified economic theory of how to construct the institutions that are central to the success
of capitalism.
a. True
b. False
LOC: Understanding and applying economic models
108. Regarding the institutional requirements of efficient markets,

a. Western economic theory ignores the operation of efficient markets
b. market economists have an almost perfect understanding
c. market economists would never take the necessary institutions for granted
d. those involved in a transition from centrally planned economy must develop a deep
appreciation
109. Which of the following transitional economies has become a high-income nation?
a. Czech Republic
b. Kazakhstan
c. China
d. Vietnam
LOC: International trade and finance TOP: Institutional Requirements of Efficient Markets
110. Lessons about the nature of economic processes will likely emerge from the analysis of transitional
economies.
a. True
b. False
LOC: The study of economics, and definitions of economics

Chapter 20 - 3e

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Chapter 20 - 3e

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Chapter 20—Economic Development

3. Which of the following does not describe the World Bank?

4. Which of the following is true about GNP?

7. Industrial market countries are also referred to as

8. Compared to industrial market countries, developing countries usually have

11. There is a tremendous range in productive performance around the world.

19. A trend in developing countries is that

21. If Gloria is woman in a developing country, then it is likely that

23. Labor productivity depends on the

24. Labor productivity depends on the

25. Labor productivity depends on the

26. Labor productivity depends on the

28. Which of the following is true?

30. If Eddie Li is a skilled worker employed in a low-skill job, he is

33. In 2010 the unemployment rate in Zimbabwe was 95%

38. A requirement for development is

39. In developing countries, it is not true that

40. Production and exchange depend on an reliable infrastructure of

46. Social capital is

50. An example of a poverty trap is

52. Successful management of resource wealth is a poverty trap

53. To escape poverty, a country needs

55. Developing countries

56. The bulk of exports from industrial countries are

57. The bulk of exports from non-industrial countries are

61. Which of the following is not true about migration?

64. One of the reasons that import substitution is popular is that

65. When a developing country relies on import substitution,

66. When a developing country relies on export promotion,

71. The country of Excludania can discourage foreign investment by

73. Foreign aid can take the form of

74. Which of the following is not an example of foreign aid?

78. A downside to foreign aid is that

81. Economic systems can be classified based on

85. Soft budget constraints will lead to

86. In centrally planned economies, most prices are not

94. In the developing country of Sixsigma, most likely

97. In a system of impersonal exchange,

98. The first step in gradualism is

100. One example of gradualism is taking place in

101. Privatization is the

102. Privatization requires

103. A firm should be transparent, meaning

104. The major advantage of a market economy is that

108. Regarding the institutional requirements of efficient markets,

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